Conexant Announces First Quarter Results; Performance Improvements On Track and 11 Percent Sequential Revenue Growth.NEWPORT BEACH Newport Beach, residential and resort city (1990 pop. 66,643), Orange co., S Calif., on Newport Bay and the Pacific Ocean; inc. 1906. It is a popular seaside resort and yachting center. Manufactures include electrical and medical equipment, computers, boats, and adhesives. , Calif.--(BUSINESS WIRE)--Jan. 19, 1999--Conexant Systems, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CNXT), which was spun-off from Rockwell International Rockwell International was the ultimate incarnation of a series of companies under the sphere of influence of Willard Rockwell, who had made his fortune after the invention and successful launch of a new bearing system for truck axles in 1919. on December December: see month. 31, 1998, today announced revenues of $294.7 million for the first fiscal quarter ended January 1, 1999, up 11 percent over the $264.6 million in revenues reported for the fourth quarter of 1998. The company reported a net loss of $57.1 million, or $.60 per share on a pro-forma basis, compared to a net loss of $233.8 million in the prior quarter. Revenues in the comparable first quarter of fiscal 1998 were $383.4 million, resulting in net income of $20.6 million. The company's first-quarter loss on a pre-tax basis was $97.3 million, which included $91 million in unusual and special charges, detailed in the First Quarter Charges section below. "Our performance improvement program is on track as we start to reap the benefits of our restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities," said Dwight W. Decker, chairman and chief executive officer of Conexant. "Excluding the various one-time charges, we were approaching break-even performance for the quarter. "Revenue growth was led by the seasonally strong performance of our Personal Computing Refers to users working on their own computers rather than a terminal to a mainframe. Sometimes, the term refers to using computers at home for work and/or entertainment in contrast to business use only. See personal computer. Division, which also experienced slower-than-expected modem price erosion. In addition, we are encouraged by the order activity and design wins achieved during the quarter in our expansion platforms: the Wireless Communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. , Network Access, Personal Imaging and Digital Infotainment (INFOrmation enterTAINMENT) Refers to all the information and entertainment services delivered to the home, which are essentially telephone, TV and Internet access. divisions," Decker said. "Based on our first quarter performance and current order visibility, our expectations for the second quarter are stronger than they were 90 days ago. The sequential revenue decline anticipated in our seasonally weak second quarter should be between five and ten percent, less than previously expected," said Decker. "In addition, with improved factory utilization, and elimination of the costs associated wit our restructuring and spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. programs, we believe we can deliver gross margins of between 38 and 42 percent of revenue. At the same time, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. should decline by approximately 10 percent from reported first quarter levels. "Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , we remain on track for a return to profitability in the second half of calendar 1999," Decker added. First Quarter Charges The company's first-quarter loss included $91 million in unusual and special pre-tax charges:
-- $40 million related primarily to unusually high inventory costs,
flowing through cost of sales, as a result of lower manufacturing
capacity utilization over the last four months of fiscal 1998.
-- $13 million of operating expenses was associated with
Conexant's new corporate identity campaign, payroll-related
restructuring costs and corporate set-up expenses.
-- A special charge of $18 million resulted from the voluntary
employee retirement program completed by the company during the
quarter.
-- An additional special charge of $20 million resulted from
Rockwell's recent decision to further write-down wafer
fabrication facilities in Colorado Springs, Colo., which were
retained by Rockwell as part of the Conexant spin-off. Accounting
rules require that this non-cash charge be reported in Conexant's
last quarterly results as a subsidiary of Rockwell.
First Quarter Product Highlights
-- The Network Access Division began volume shipments of the first
product in its AnyPort(TM) family of remote access Internet
concentrators. The high density, three-port-per-chip CSMV/3
offers Internet service providers integrated Voice-over-IP and
data access in a complete system-level semiconductor solution.
The AnyPort family is designed to meet the growing demand for
multi-service remote access driven by the convergence of voice
and data networking.
-- During the quarter, the Wireless Communications Division shipped
its 25-millionth digital cellular power amplifier device since
entering this market segment in 1996. Conexant is the leading
provider of these devices in the code division multiple access
(CDMA) cellular and personal communication systems (PCS) handset
segments, and is currently shipping in excess of two million
power amplifiers per month.
-- The Personal Imaging Division announced a family of high
performance, multi-function peripheral (MFP) chipsets, the first
complete system solutions enabling color inkjet printing
capability with black-and-white scan, copy and fax functionality.
-- Enabling simple and affordable networking in the home, the
Personal Computer Division began volume shipments of its
LANfinity(TM) family of home networking chipsets to retail PC
add-in card manufacturers. The division also commenced volume
shipments of its RipTide(TM) combination audio/modem chipset to
Hewlett Packard and other personal computer manufacturers.
Expanding the applications for analog modems, the division
shipped almost 500,000 modems for use in the Sega Dreamcast
next-generation gaming platform offering Internet multi-player
capabilities.
Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future results of the company (including certain projections and business trends) that are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: global and market conditions, including, but not limited to, the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the semiconductor industry and the markets addressed by the company's and its customers' products; demand for and market acceptance of new and existing products; successful development of new products; the timing of new product introductions; the availability and extent of utilization of manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; fluctuations in manufacturing yields; product obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; the ability to develop and implement new technologies and to obtain protection of the related intellectual property; the successful implementation of the company's diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. strategy and restructuring plan; labor relations of the company, its customers and suppliers; timely completion of Year 2000 modifications by the company and its key suppliers and customers; and the uncertainties of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , as well as other risks and uncertainties, including but not limited to those detailed from time to time in the company's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Other brands and names contained in this release are the property of their respective owners. Conexant Systems, Inc., is the $1.2 billion company that was created when Rockwell International Corporation spun off its semiconductor systems business to shareowners in December 1998. Conexant is the world's largest independent company focused exclusively on providing semiconductor products for communications electronics. With more than 30 years of experience in developing analog modem A common device that converts the computer's digital pulses to tones that can be carried over analog telephone lines. See modem. technology, the company draws upon its expertise in mixed-signal processing and communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry to deliver integrated systems and semiconductor products for a broad range of communications applications. These products facilitate communications worldwide through wireline voice and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. networks, cordless cord·less adj. Having no cord, usually using batteries as a source of power: a cordless telephone. cord and cellular wireless telephony telephony without wires, usually employing electric waves of high frequency emitted from an oscillator or generator, as in wireless telegraphy. A telephone transmitter causes fluctuations in these waves, it being the fluctuations only which affect the receiver. See also: Wireless systems, personal imaging devices and equipment, and emerging cable and wireless broadband High-speed wireless transmission of data. What is "high" speed is always a changing number. Wireless systems are typically slower than land-based, wireline networks. In the past, wireless broadband started at 250 Kbps, whereas land-based broadband was generally considered to start at T1 communications networks The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. . The company aligns its business into five product platforms: Personal Computing, Personal Imaging, Wireless Communications, Digital Infotainment, and Network Access.
Conexant Systems, Inc.
Consolidated Statements of Operations
In thousands except for per share
(Unaudited)
Three Months Ended,
01/01/99 09/30/98 01/02/98
Net sales $294,678 $264,593 $383,452
Cost of
sales 221,680 352,341 208,509
Gross
margin 72,998 (87,748) 174,943
Research &
development 69,553 86,631 82,093
Selling, general & admin-
istrative 64,016 60,607 59,542
Special charges - Rockwell retained
assets 20,000 -- --
Special charges -
other 17,906 147,306 --
Operating (loss)
earnings (98,477) (382,292) 33,308
Other income,
net 1,163 4,266 4,483
(Loss) income before income
taxes (97,314) (378,026) 37,791
(Benefit) provision for income
taxes (40,191) (144,273) 17,225
Net (loss)
income $(57,123) $(233,753) $20,566
Pro forma net (loss) per
share $(0.60)
Pro forma weighted average outstanding
shares 94,935
Condensed Consolidated Balance Sheets
In thousands
01/01/99 09/30/98
(Unaudited)
Current Assets:
Cash and cash equivalents $13,282 $14,000
Restricted cash 64,000 --
Accounts receivable 135,780 166,386
Inventories 142,050 200,926
Deferred income taxes 90,024 152,559
Assets held for disposal -- 42,346
Other current assets 9,517 10,735
Total current assets 454,653 586,952
Property, plant & equipment,
net 682,968 713,400
Other assets 115,303 118,178
Total assets $1,252,924 $1,418,530
Total current liabilities $289,885 $330,263
Other long-term obligations 65,967 78,892
Rockwell's net investment -- 1,009,375
Common stock 94,882 --
Additional paid-in capital 802,190 --
Total shareholders' equity 897,072 1,009,375
Total liabilities and shareholders'
equity $1,252,924 $1,418,530
Conexant Systems, Inc.
Selected Corporate Data
(Unaudited)
Business Platform Overview
Three Months Ended,
01/01/99 09/30/98 01/02/98
% of Sales Revenue % of Sales Revenue % of Sales Revenue
Personal
Computing 51% $152M 43% $115M 61% $233M
Personal
Imaging 6% $16M 8% $21M 8% $32M
Digital Infotain-
ment 14% $40M 13% $35M 11% $41M
Network
Access 14% $42M 16% $42M 9% $34M
Wireless Communi-
cations 15% $45M 20% $52M 11% $43M
Three Months Ended,
Other Data 01/01/99 09/30/98 01/02/98
Depreciation and
Amortization $52M $66M $47M
Capital
Expenditures $15M $76M $43M
Headcount 5,946 6,291 6,187
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion